May 31, 2018 / 10:34 AM / in a year

Olympics, World Cup windfall add kick to Swiss economy

ZURICH (Reuters) - Switzerland’s economy grew robustly in the first quarter as a weaker franc supported exports and global sporting events helped fill the coffers of the Swiss-based International Olympic Committee (IOC) and soccer body FIFA.

FILE PHOTO: General view of the city of Zurich and Lake Zurich, Switzerland July 20, 2016. REUTERS/Arnd Wiegmann

Gross domestic product (GDP) expanded 0.6 percent from the previous quarter and 2.2 percent year on year, data from the Swiss Secretariat for Economic Affairs (SECO) showed on Thursday.

Analysts polled by Reuters had on average forecast growth of 0.5 percent and 2.3 percent respectively.

The IOC and FIFA take in significant licensing and television fees, which during years with several global events like the just-finished Winter Olympics in South Korea and the upcoming World Cup soccer tournament in Russia can have a dramatic impact on economic growth, a SECO spokesman said.

Stripping out the impact of major sporting events, quarter-on-quarter growth was 0.4 percent.

“Even after this adjustment, it is confirmed that while the economic recovery has slowed, it is increasingly reaching domestically oriented sectors,” SECO said in a statement, citing a 0.4 percent increase in consumption of household goods, 3.6 percent growth in equipment and software investment.

International demand for precision instruments, watches and jeweler helped fuel the export-led economy, with shipments out of the country rising 2 percent.

In the three-month period, a weakening franc also offered respite for firms squeezed by the currency’s surge after the Swiss National Bank in January 2015 scrapped a policy of limiting its value against the euro.

With turbulence in Italy knocking European markets on their heels this week and sending the Swiss franc soaring in value, however, SNB leaders are sticking to their strategy of negative interest rates and a readiness to intervene in currency markets, if necessary.

“We are convinced that our monetary policy stance of negative interest rates with the readiness to intervene on currency markets takes account of this fragility,” SNB Vice Chairman Fritz Zurbruegg said on Thursday.

The next SNB quarterly policy review is on June 21.

In March, the SNB said it was still expecting GDP growth for the full year to be around 2 percent, with unemployment slipping further.

Reporting by John Miller and Michael Shields in Zurich; editing by Mark Heinrich

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